While privilege exists, justice can't be achieved.

Posts Tagged ‘infrastructure’

Great story by Hal Dardick in today’s Tribune explaining the real reason the Lincoln Yards TIF had to be Rahm’d thru the City Council before the new Mayor took office. The area just barely qualified as a TIF, and pending new assessments were going to rise enough that it would no longer be eligible. According to the story, it’s uncertain whether the new Mayor could have stopped the project, but she settled for what appear to be minor concessions.

Of course, the whole idea behind TIF’s is that money can be pulled from general revenue into giant slush funds, which the Mayor (and others) can manipulate with little oversight. Meanwhile, there’s little left for routine maintenance, replacement of infrastructure and funding of government schools and other services. Which increases the “need” for TIF’s.

Dardick’s article goes into considerable detail, includes a link to a recent report by Lincoln Institute (no relation to Lincoln Yards, afaik). He does say “land” when I think he means “land + improvements.”

One counterfactual that Dardick doesn’t bother with: What would have happened if Joe Berrios was still Assessor? Would he have nudged down some values to keep the area eligible? Or, to look at it the other way, suppose the current Assessor, who appears to be more conscientious, had been in office since 2013. Perhaps the earlier figures would have been higher, so the increase would be less?

We’ll never know, and it shouldn’t matter. In a well-run city, TIF’s wouldn’t be needed, and a well-informed electorate wouldn’t tolerate them.

One way to pay involves value capture — establishing special taxing areas that assume that development like a new road benefits landowners by growth in sales, rents or property values, he said.

“I’m a developer,” Ranney said. “I think developers need to pay more for the value that is generated (by the project). Value capture makes sense. That is something that the real estate community isn’t too keen on — but let’s get real. If you use public dollars to generate private wealth, you can darn well pay for it.”

And an observation regarding transit progress in the region:

Noting he takes the same train from Libertyville that his father took, Ranney added that “nowhere else in the world do they have complacency about exactly the same level of service.”

The article quotes officials saying that coordination among infrastructure construction and maintenance actors is poor, as is the quality of construction and building inspection. Probably true, and surely in Chicago the inspectors are trustworthy and respected, and infrastructure work is usually well-coordinated.

What really does seem to be a difference is how long infrastructure is expected to last. The China Daily article says 1200 out of 5100 total km of Beijing sewers (possibly referring only to storm sewers) is “at least 30 years old, with some of it dating back six decades. This is typical for most cities, experts say.” One infers that Chinese sewers are expected to last only 30 years. In Chicago by contrast, 1/4 of the water pipes is said to be over 100 years old, apparently the age at which replacement is likely to be justified. Sewers are perhaps even older. And I think this age profile is typical of mature American cities.

Apparently the City is getting a one-time payment of $1.16 billion (yahoo says $1.15 billion, but what’s $10 million among friends?). Hopefully this is entirely in cash and will be paid at the start of the “lease.” But what is being given up to one of Morgan Stanley’s financial devices for 75 years? It’s not really the parking meters, because no meter could last more than a decade or two. Is it the street space controlled by the meters? Can the City reduce this space in the future if needed for a driveway, bus stop, hydrant? What about spaces that currently lack meters but where they might be appropriate in the future?

While the Tribune says rates will quadruple, or more, by 2013, but what happens later? This deal apparently runs to 2084. Of course we can be sure it’s fair. The Tribune says

The mayor’s nephew, William Daley Jr., works for Morgan Stanley and lobbies state and Cook County officials on the firm’s behalf.

“I think it’s a fair price” for the parking meter system, said Dana Levenson, head of North American infrastructure banking for Royal Bank of Scotland, who helped negotiate the parking lot lease in his former position with the city.

The deal covers “more than 36,000 meters,” which seems to value each space at about $32,000. Of course that’s a citywide average, surely spaces in outlying districts aren’t worth as much as those in the loop.

One thing that I don’t doubt: Chicago street parking has been underpriced and raising the rates is a smart move for the City. HIgh Cost of Free Parking author Donald Shoup recommends…

Charge market rates for curb parking. He defines market rate as the parking price that will yield 85 percent occupancy

Clearly the City has been losing revenue for years, essentially subsidizing motorists while taxing retail purchasers, homeowners, renters, and the rest of us.

No great surprises in the new Gov’t Accountability Office report on: PHYSICAL INFRASTRUCTURE Challenges and Investment Options for the Nation’s Infrastructure. (Summary, full report). Roads, bridges, dams, railroads, airports etc are decaying and not keeping up with “demand,” and existing funding methods are proving inadequate. Is there a cheaper way to meet the needs? The report does not say. Is it worth spending what it costs to update the facilities? Not discussed. And perhaps most importantly, is there a way that the owners of land benefiting from infrastructure improvements could be made to pay for them? Well, one sentence recognizes some approximation of the possibility:

A variety of taxes have been and could be used to fund the nation’s infrastructure, including excise, sales, property, and income taxes. (p. 15)